Microsoft China offices visited in apparent antitrust probe

Though it's not currently clear what the regulators are looking for.

Officials from China's State Administration for Industry and Commerce (SAIC) made surprise visits to four Microsoft offices today as part of what is described by the Financial Times as an antitrust probe. Offices in Beijing, Shanghai, Guangzhou, and Chengdu were inspected by SAIC officials.

The nature of the investigation is currently unclear, with neither Microsoft nor SAIC offering any details. So far, the regulator has made no formal complaint against the company.

Microsoft is already in the Chinese government's crosshairs, with the government issuing a ban on the use of Windows 8 on government PCs due to security concerns. In June, the state-run broadcaster called into question the security of the operating system and cited experts claiming that the company was working with the US government to spy online.

The software giant is not the only American company to be scrutinized by Chinese regulators. In July, the state broadcaster claimed that Apple's iPhone was insecure. US chip company Qualcomm is also under investigation, and another Chinese regulator, the National Development and Reform Commission, has asserted that Qualcomm used monopoly power to set license fees for its 4G chips.

The Financial Times writes that according to unspecified US technology executives, this move by China is part of a broader effort to strengthen Chinese companies at the expense of American ones. While security is an easy argument to make after the Snowden revelations, some of the antitrust investigations predate Snowden's leaks. The FT notes that an investigation into another company producing 4G technology, Interdigital, was dropped in May after it lowered its licensing fees.

The Wall Street Journalfurther reports that these SAIC site visits do not always lead to formal charges.

Microsoft said that it is cooperating with SAIC officials. "We aim to build products that deliver the features, security and reliability customers expect," its statement reads. "We will actively cooperate with the government department's investigation and answer related questions."

Uh-huh. Right. Can anyone guess as to what the real reason is? MS didn't pay off the correct party official?

Ban on Win 8 due to security concerns? So they are running XP instead?

The current Chinese govt is using an anti-corruption drive as a smokescreen to purge political rivals. Bribing the wrong official is at least as likely to be the problem. (Where "wrong" means "minion of someone in the last govt".)

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

This is the latest data point in China's recent pattern of going after Western companies - it's investigating GlaxoSmithKline for paying bribes. For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result). Now this.

Bribery and selling expired meat are both things worth going after companies for, but these are hardly unusual occurrences in China and the fact that the authorities are going after Western (or Western-owned) companies suggests that there is a political dimension to this.

This is the latest data point in China's recent pattern of going after Western companies - it's investigating GlaxoSmithKline for paying bribes. For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result). Now this.

Bribery and selling expired meat are both things worth going after companies for, but these are hardly unusual occurrences in China and the fact that the authorities are going after Western (or Western-owned) companies suggests that there is a political dimension to this.

Do you have any source claiming China is not going after local companies for bribery or for selling expired meat?

This is the latest data point in China's recent pattern of going after Western companies - it's investigating GlaxoSmithKline for paying bribes. For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result). Now this.

Bribery and selling expired meat are both things worth going after companies for, but these are hardly unusual occurrences in China and the fact that the authorities are going after Western (or Western-owned) companies suggests that there is a political dimension to this.

Do you have any source claiming China is not going after local companies for bribery or for selling expired meat?

Really, gonna pull this out for your 1st post to Ars?!?! Couldn't you add anything more to the conversion? Like a source where it state they are going after local companies? Or hey, try something novel like posting your opinion on what you think. That's what we're here for.

To actually ADD to the conversation, China has been "cracking down" on corruption and bribery for years. You would think the penalty of death in China for being caught (sourced from wiki) would persuade them from not taking the bribe. I mean, everyone's got a price, just seems life comes cheap over there. But it does seem a lil sketchy that the ones we hear about are western owned companies.

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

Like the FT article mentioned, this is part of ongoing long term trade/economic warfare against the US. Chinese government thinks they have some leverage to pull in order to save some money near term (lower licensing sw/IP) and, more importantly for long term, grow their own domestic technology companies instead of relying on American ones.

It will be real interesting how it turns out over the next decade or two. Will American government/companies sit back and try to appease them? Or will they say FU, you pay or don't get good stuff from us?

Like the FT article mentioned, this is part of ongoing long term trade/economic warfare against the US. Chinese government thinks they have some leverage to pull in order to save some money near term (lower licensing sw/IP) and, more importantly for long term, grow their own domestic technology companies instead of relying on American ones.

It will be real interesting how it turns out over the next decade or two. Will American government/companies sit back and try to appease them? Or will they say FU, you pay or don't get good stuff from us?

It's hard to opt out though. Don't compete in China and you provide a huge opportunity for someone else to refine and develop their competing product in that market -- with no restriction against competing in your markets. I think it would have to be extremely bad for companies to actually stay out. Just look at foreign investment in Russia, that continues even though it's a disaster waiting to be nationalized (or at least given to an oligarch).

This is exactly the problem from China's ruling class! They want a backdoor!

I just got back from a month long trip to China. Their citizens, in mass, are aware and totally fed up with their government's attempts to limit what they can read or write. From my experience, they can talk freely about their opinions with just about anyone they want too on a person-to-person basis. But they are not allowed to print, post, or publish their opinions in any manner.

The days of the 5% of the population who are in the Communist party making mandates for the other 95% is just about over. From my visit I would estimate that at least 30% of the Chinese economy is based on construction which at it's current rate is unsustainable. They will have a big bust in the next 3-5 years. Almost all of their construction will come to a halt!!!!

In China, the free market place and individual freedom cats have been let out of the bag. No way the 5% corrupt communist party will ever be able to put it all back in the bag. That is the theme I heard over and over again on my visit.

In a communist society everyone is supposed to be equal. But problem is, some people are more equal than others. Most everything in China rationed to some extent and only the privileged corrupt benefit.

It is impossible to establish a significant business in China without bring on a well connected member as majority owner. Call it a partnership, graft, bribery, or whatever you want.

So yeah, any USA company doing business in China has bribed contrary to our laws. Just give the Chinese "cousin" 50% of the business for nothing and call it a partnership. But really it's a bribe!

Maybe the default use of Skydrive makes the Chinese government wary because Windows 8 users could end up putting confidential documents online and exposed to Five Eyes agencies. Then again, it's funny that some province-level agencies are trialling the Azure cloud for government data.

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

/rant

While it's true that American business has greatly benefited China, it is also true that China and other asian countries helped to make American business what it is today.

For a start, most of the products from America tech companies are made in China. It's not just because of cheap labour. Up until recently, America neither had the facilities nor the technical people to produce those products.

Secondly, a lot of the rare metals that goes into those products are from China as well, because up until recently, they didn't give a damn about the environment. If they find some metal underground in US, it'll take so much protest and litigation before they decide if they mine it or not. In china; there's metal? Go!

Furthermore, just look at how many asians there are working in Tech companies. For whatever reason, asians just tends to be better at math and science and that sort of stuff than white people. Ironically most of them graduates from American Colleges.

All I'm saying is that things is not as straight forward as America made China what is today, by putting in the most effort to make money. But now the ungrateful China gives us crap now.

And honestly, I think it's China who's putting in the most effort to make as much money as possible without caring about who they got into bed with. That's how they ended up getting all our money isn't it?

This is the latest data point in China's recent pattern of going after Western companies - it's investigating GlaxoSmithKline for paying bribes. For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result). Now this.

Bribery and selling expired meat are both things worth going after companies for, but these are hardly unusual occurrences in China and the fact that the authorities are going after Western (or Western-owned) companies suggests that there is a political dimension to this.

Perhaps this is indicative of western owned businesses and how they tend to operate outside of America?

This is the latest data point in China's recent pattern of going after Western companies - it's investigating GlaxoSmithKline for paying bribes. For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result). Now this.

Bribery and selling expired meat are both things worth going after companies for, but these are hardly unusual occurrences in China and the fact that the authorities are going after Western (or Western-owned) companies suggests that there is a political dimension to this.

Do you have any source claiming China is not going after local companies for bribery or for selling expired meat?

If the communist China government is interested in going after local companies that create toxic baby formula, toxic food, electronics that blows up, 9 out of 10 chinese companies would be closed down right now.

Like the FT article mentioned, this is part of ongoing long term trade/economic warfare against the US. Chinese government thinks they have some leverage to pull in order to save some money near term (lower licensing sw/IP) and, more importantly for long term, grow their own domestic technology companies instead of relying on American ones.

It will be real interesting how it turns out over the next decade or two. Will American government/companies sit back and try to appease them? Or will they say FU, you pay or don't get good stuff from us?

The thing is, China don't give a damn if America company wants to pull out. In fact, China's policy is "follow our rules or get the hell out". Just look at what happened to google.

It's the same reason why every country and every company in the world used to try to please America in the last 100 years. America used to be the most prosperous country in the world. But since the financial crises, that dynamic has been shifting.

Secondly, a lot of the rare metals that goes into those products are from China as well, because up until recently, they didn't give a damn about the environment.

Untrue. Rare Earths have been coming from China because they dumped a crap load of product on the market well below market price for the specific purpose of driving competition out. Mines in Australia, Canada, Africa and the US were closed as a result. Only after all those mines shut down, did China allow pricing to float back to market.

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

/rant

For a start, most of the products from America tech companies are made in China. It's not just because of cheap labour. Up until recently, America neither had the facilities nor the technical people to produce those products.

and most gardeners are Mexicans because we don't have the technical know how to mow our own lawns.

If the communist China government is interested in going after local companies that create toxic baby formula, toxic food, electronics that blows up, 9 out of 10 chinese companies would be closed down right now.

For selling of expired meat, it has shut-down Shanghai Husi Food (which is owned by an American meat processing company) which supplies meat to Chinese McD and KFC outlets (McD has stopped selling McNuggets as a result).

Perhaps this is indicative of western owned businesses and how they tend to operate outside of America?

Secondly, a lot of the rare metals that goes into those products are from China as well, because up until recently, they didn't give a damn about the environment.

Untrue. Rare Earths have been coming from China because they dumped a crap load of product on the market well below market price for the specific purpose of driving competition out. Mines in Australia, Canada, Africa and the US were closed as a result. Only after all those mines shut down, did China allow pricing to float back to market.

Really? I didn't know that. In that case, let's call it half true shall we? If anything, it affirms the Chinese will do anything to make money. :-)

Any how, my point was, It's never as straight forward as saying "America made china what it is, now China repay us with their communist crap." And how China managed to put others out of business really goes to show how complicated things can get.

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

/rant

For a start, most of the products from America tech companies are made in China. It's not just because of cheap labour. Up until recently, America neither had the facilities nor the technical people to produce those products.

and most gardeners are Mexicans because we don't have the technical know how to mow our own lawns.

You misunderstand me. I'm not saying that America CAN'T build the facilities, or train the needed workers. Only that America don't have them at the moment. I was specifically thinking about how Apple is unwilling and unable to bring the production of i-devices to the states. There's just not enough factories, and not enough workers skilled at working on production line. Billions and billions of dollars would need to be spent to before Apple and other companies can produce their products in America on the scale they do right now in China.

Edit: From interview with Tim Cook "... look, how many tool-and-die makers do you know in America? I could ask them, nationwide, to come here tonight and we couldn't fill [a few hundred seats in] this room," noting that in China, tool-and-die makers fill cities.

Microsoft's net revenue is $22.43 billion/year, which is the absolute maximum they could possibly pay to anybody.

In other words, any bribe Microsoft could make would be chump change and not worth the bother.

There's a pretty good chance Microsoft isn't even the target of this investigation. They might be investigating one of Microsoft's business partners, of which they have many.

I don't think you understand how bribes work (or you REALLY don't understand how basic economics work). If I'm a corrupt government official, and I want a bribe, you don't have to pay me more than the GDP of my country. A corrupt Alabama cop doesn't make the whole GDP of the US, and his bribe doesn't go in the US treasury, it goes in his pocket. You're not bidding against his whole country's economic power...just against a corrupt man's integrity.

I love it. It was American business (as well as the rest of the west) that made China what it is today. Now that China has all our money, they start flexing their communist crap. What a joke. I can't say that I really care though. It's these American businesses that started the ball rolling downhill in an effort to make as much money as possible without caring about who they got into bed with.

/rant

While it's true that American business has greatly benefited China, it is also true that it is China and other asian countries who made American business what it is today.

For a start, most of the products from America tech companies are made in China. It's not just because of cheap labour. Up until recently, America neither had the facilities nor the technical people to produce those products.

Secondly, a lot of the rare metals that goes into those products are from China as well, because up until recently, they didn't give a damn about the environment. If they find some metal underground in US, it'll take so much protest and litigation before they decide if they mine it or not. In china; there's metal? Go!

Furthermore, just look at how many asians there are working in Tech companies. For whatever reason, asians just tends to be better at math and science and that sort of stuff than white people.

You had me until you got to "white people". You do realize that you are comparing a nation and the asian culture to a race.... or what you like to call "white people".

Microsoft's net revenue is $22.43 billion/year, which is the absolute maximum they could possibly pay to anybody.

In other words, any bribe Microsoft could make would be chump change and not worth the bother.

There's a pretty good chance Microsoft isn't even the target of this investigation. They might be investigating one of Microsoft's business partners, of which they have many.

Probably the "bribe" would actually be forcing them into a local partnership. That entails fat profits for the local partner. They, and their government allies, are set to make a lot of money. The GDP of China is totally irrelevant, graft is about making individuals rich, not nations. When it comes to nations, graft actually costs the nation. But people with power may not care about that compared to what it does for themselves.